Realtors throwing in the towel

Membership in region's largest associations affected by housing slump

With the housing market flat, Southwest Florida real estate agents are retreating or quitting the business in large numbers. The Sarasota Association of Realtors is down 11 percent over last year; the Manatee County association 19 percent; and the Punta Gorda-Port Charlotte-North Port Association of Realtors 11 percent.

The Sarasota association's membership peaked with the real estate boom. In 2005, the group had 4,300 members. That has dropped to 3,600, says Kathy Roberts, the association's chief executive officer.

The ranks of the parent Florida Association of Realtors swelled by 25 percent in 2004 alone. As the market contracted -- and with it Realtors' pay stubs -- many in the industry have adopted other lines of work to supplement their income.

It is sad to see Realtors giving up on the profession but too many of them came in when the business was easy. Right now, this profession is difficult. The sellers think every offer is too low and that their home is worth more than it really is. Buyers think they are doing the sellers a favor by purchasing their home and they always want to pay less than the property is worth. Mortgages are tougher to get. There are tons of people looking at property but waiting to time the bottom perfectly before buying. Realtors are complaining, attorneys are complaining, title people are complaining, inspectors are complaining, mortgage professionals and banks are complaining. I can see why some Realtors are looking for greener pastures.

Here are a few tips on choosing a Realtor to work with:

Experience - Make sure your agent has closed some deals. I don't consider years in the business a good measure of experience. I have met so many agents that have been in the business for 10 or 20 years but really aren't all that experienced. In a market like this experience goes a long way.

Full Time - Is your agent full time? How can a Realtor effectively market your home or help you buy a home when they have another job taking up the majority of their time? I'm not trying to throw the part timers under the bus but servicing customers properly can take a lot of time. I believe the overall customer experience is better when you are working with a full time, experienced agent.

Communication - Make sure you pick a Realtor that you can talk to and who listens to your needs. You might be working with your Realtor for months or years depending on whether you are buying or selling. Good communication in the process is crucial. Make sure your Realtor is accessible. That does not mean you should bother your Realtor every second of the day but make sure they call back in a timely fashion.

Just Sold - River Club

A client of mine just purchased this gorgeous home in River Club. The home has 4 bedrooms, den, 3 bathrooms with 3,523 square feet and sits on almost an acre.

Property description:

Beautiful Todd Johnston custom home on a private almost one acre lost in the estate section of River Club. Upgrades throughout the home including crown molding, 14' ceilings, cherry cabinetry, granite wet bar, wine refrigerator, columns in foyer and dining room, marble fireplace and custom built-ins. The sales price (now public record) was $620,000.

If you need help selling your home or want me to represent you in a purchase please contact me at 941-812-6272 or email me.

Zell predicts housing recovery in spring

Real estate billionaire Sam Zell, chairman of Equity Group Investments, suggested the housing market will begin its recovery this spring.

"I think (housing) starts have already pretty much bottomed out," Zell told CNBC Tuesday. "I think sales will start to occur, and we'll start to clean up the inventory."

Here is a link to the Chicago Trubine article.

For those who don't know. Sam Zell is a billionaire and real estate entrepreneur. He is co-founder and Chairman of Equity Group Investments, a private investment firm and has an estimated net worth of $6 billion dollars. Zell also owns Tribune Company, the publisher of the Los Angeles Times, the Chicago Tribune, New York Newsday and owner of the Chicago Cubs.

Ignore the Headlines

I read an interesting article from TIME magazine last night. Here is a link to the article.

I am going to cut and paste the article below:

Famed Money Manager is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That's no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn't scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, "in spite of all the great and minor calamities that have occurred ... all the thousands of reasons that the world might be coming to an end--owning stocks has continued to be twice as rewarding as owning bonds."

A top reason to not buy stocks, in Lynch's view, is if you don't already own a home--in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me--housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, "The way to make money is to buy when blood is running in the streets."

And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already--or we may avoid one altogether. You just never know.

As for housing, certainly some skepticism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven't seen the worst headlines just yet, though they may well be close. And "jumbo" mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.

But let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious--before an inevitable rise in interest rates wipes out your advantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

It's more complicated if you must sell before you can buy. But that logjam won't persist forever--and if it appears you'll be trapped for a few years, try to refinance at today's lower rates. Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term--and get off your thumbs.

The Case Against Waiting to Buy

Today's Home Price - $218,900
Put 20% down and get a 30-year fixed-rate mortgage
5.5% Current rates after recent declines
Monthly payment $994.94

Cost in 12 months?
If prices drop an additional 10% home price will be $197,010
Recession ends, and the Fed starts to raise rates - Interest rate 6%
Monthly payment $994.94

CONCLUSION: If you waited a year to buy, you would have saved nothing and spent a year living someplace you'd rather not be.

Sold - Longboat Key Condo

My client closed on this wonderful beach front Longboat Key condo yesterday. This 2 bedroom, 2 bathroom condo offers unobstructed gulf and beach views. It was listed for $850,000. Please contact me at 941-812-6272 if you are looking to purchase on Longboat Key.

(photos removed)

Vulture funds looking at Florida real estate

I have been in touch with a few private equity firms looking to make a bulk purchase of property in the Sarasota area. There are alot of "vulture funds" or "opportunity funds" looking to pick up Florida real estate at depressed prices. They typically seek out hurting condo developers who are sitting on a ton of inventory and make offers to purchase condos in bulk at reduced prices. Once they purchase them they typically rent them out for several years.

The money comes from all over. Basically, these private equity firms or vulture funds are just a group of wealthy individuals pooling their money together to purchase in large quantity. Buying in quantity allows them to get a price discount and better returns on their money. I even read that Jack McCabe, the economist who spoke in Sarasota last week, has created a McCabe Acquisitions LLC to purchase distressed property.

This can be a good thing for the market. In a market like this reducing inventory levels will lead to a more balanced market. Demand will increase because buyers will be less apprehensive about the market.

While our inventories are hovering around a historic high we appear to be in a better situation that south Florida. I recently heard that there were 24,000 condos for sale with another 19,000 new condos scheduled to be completed soon.

Here are a few of the buildings where the developer is still trying to sell units.

Alinari
Broadway Promenade
Rivo on Ringling
Kanaya
Positano
1350 Main
Phillippi Landings
Bel Mare at Riviera Dunes
Promenade at Riverwalk

I am forgetting a few but this is the bulk of them. We appear to be in much better shape than south Florida.

SKY Sotheby's Spring Auction

SKY Sotheby's is pleased to announce the date of our Spring 2008 luxury portfolio auction. The event will take place Friday April 11, 2008 at The Longboat Key Club. This time we are allowing only 50 luxury properties in the auction. More information: SKY Sotheby's Auction

Buyers

Sellers

For more information email marc.rasmussen@skysothebys.com or call me at 941-812-6272.

93%

In December of 2007 the average sales price to list price ratio was 93% for single family homes and 91% for condominiums.

Here is a run down of 2007 statistics.

Single Family Homes
January - 91%
February - 90%
March - 93%
April - 93%
May - 92%
June - 92%
July - 93%
August - 93%
September - 92%
October - 93%
November - 91%
December - 93%

Condominiums
January - 93%
February - 94%
March - 94%
April - 97%
May - 92%
June - 94%
July - 93%
August - 92%
September - 91%
October - 92%
November - 90%
December - 91%

These statistics are the sales prices versus the last list price. Not the original list price.

Downtown Sarasota Condos

I updated my Downtown Sarasota Condo sold page. Now you can see compare 2006 and 2007 sales in most of the condos in the downtown area. I received a few emails from some readers who wanted to see how much prices have dropped in the downtown Sarasota condo market.

Don't list your property unless you are truly motivated to sell it

I turned down another listing yesterday. I hate to turn down the possibility of making a buck but the best advice I can give to many potential sellers is to not list. If you are unmotivated to sell there is a slim chance your property will sell. In most cases, you have to be the best property at the best price in your market segment. You have to be the bright flower in the field of weeds.

Another problem with a bunch of overpriced properties on the market is that it affects our supply statistics which in turn affects our demand. Newspapers often report that there is enough property on the market to last several years. This kind of stuff scares buyers into not acting. If you are a possible buyer and you read in the newspaper that the Sarasota real estate market has a 3 year supply of properties for sale that is going to make you think twice.

There will always be overpriced properties on the market. That will never go away. We had them in a strong market and we have much more of them in a weak market.

If you are thinking of selling your property hire an appraiser or a competent Realtor to give you a realistic valuation. You will save yourself a ton of headaches. Be objective about your property and put yourself in the buyers shoes. Visit other like kind properties to compare. The value of your property does not have anything to do with how much you owe on it, how much your friend "thinks" it is worth (unless they want to buy it) or what it appraised for 2 years ago.

Can you imagine what our inventory levels would be if Realtors stopped taking grossly overpriced listings?

Condo on Siesta Key

Our client wanted some better photos of her Peppertree condo that we are marketing. So we had our photographer go out there and do a reshoot. They turned out great in my opinion. Below are a couple of the new photos. What do you think?

(photos removed)

I am amazed at some of the grainy, dark and horrible photos that real estate agents use to market their properties. In a market like this you really need to stand out from the rest of the pack. Good photos certainly help do that.

"You can buy Florida real estate at 50 cents on the dollar"

I am a little tired of reading the doom and gloom articles about the Sarasota Florida real estate market. A client from Canada sent me an article from one of his newspapers about the Florida market. Like so many other articles it talks about how bad it is here. I am not saying these reporters are completely wrong. But some of them are blowing things out of proportion. One of them stated that you can buy real estate here for 50 cents on the dollar.

The reason I bring this up is because I had a client over the weekend who wanted to put in a rediculously low offer on a home that is already priced well. When I checked the recently sold homes in the community the home they were interested in was within 10% of those prices. My client wanted to submit an offer of about 60% of list price. After analyzing the recently sold homes in the community he agreed that there was little chance of getting the home at that price.

The December statistics from the Sarasota Board of Realtors show that the average sales price to list price for sold properties is 90%. In November it was 93%. January numbers should be out soon. Over the last year it is consistently between 90%-93%.

I checked MLS for all of the single family home and condo sales in January for Longboat Key, Siesta Key, Lido Key, Bird Key, Casey Key, Lakewood Ranch and Sarasota. In this specific area there were 247 sold properties (don't confuse these numbers with all of Sarasota county).

Of the 247 properties:

6 properties sold from 66% - 74% of list price
241 properties sold 75% of list price or over
81% of the properties sold for more than 85% of the last asking price
59% of the properties sold for more than 90% of the last asking price
24% of the properties sold for more than 95% of the last asking price

It is not all sunshine and rainbows out there but it is not as grim as some believe. Arm yourself with the facts not the opinions of a reporter spouting doom and gloom in an effort to sell newspapers.

Good news:

Currently there are 468 properties under contract in the area I mentioned above.

There are 697 properties under contract in the Sarasota MLS. Not all of the Manatee county transactions are reported in the Sarasota MLS so this number will actually be larger.